How to Save You From Yourself Part 3 of 3
Hello and welcome to theBlunt
Welcome to part 3 of “How to Save You from Yourself.”
If you missed the first two, we talked about shortcuts that go wrong and how “make offer” usually ends up in failure.
Today, we dig into a simple truth that is rarely acknowledged in this business.
A truth that is easy to say and hard to acknowledge.A truth that deserves more than being brushed off as someone else’s problem.What is that, you ask?It is deep understanding that in the absence of trust, no business gets done.
Let’s say that again.
In the absence of trust, no business gets done.
How do you build trust?Through communication.But what do we really mean?
Let’s look at situation #1.
Say that you are negotiating with a potential partner to process extra product. Maybe you are trying to negotiate the details for what the split is or how much they will “buy it” for from you… just to have you “buy it” back after to go to then be sold to retail shelves.
No matter that the issue is, we see so many potential business opportunities stall out completely all because each side doesn’t trust each other enough to follow through on what they say.
Does this lead to lawsuits and threats? Sometimes. One thing is for sure… it is a waste of time and energy.
How could you fix it? Communicate with each other. Be open about the business. Figure out exactly how it works and then do what you say you will do.
Let’s look at situation #2.
A group of retail license holders don’t have the time of energy to adequately run the store. They contribute occasionally, maybe helping with orders once in a while or trying to create new “processes” that don’t go anywhere. The manager on site sees the store failing, to they start taking things into their own hands too. Without communication between the owners and manager, it creates drama with the employees. The store’s atmosphere starts to go downhill. Pretty soon, the sales drop off.
Yet, instead of having open communication with the team members about how to address an issue and bring customers back, it spirals into the partners and manager blaming each other. Pretty soon, the manager is fired. The staff is now seriously on edge. The customer still aren’t coming back to shop.
Now, the retail holders are dividing into sides. One side of the owners wants to sell, the other wants to find a new manager and stay on. And, the fighting gets worse.
This leads to lawsuits and threats, in addition to a failing business.
Do you know what would have fixed this? Communication at the beginning and making sure that the owners were coming together to present a stable vision of the future. It is this communication and direction that helps the manager steer the ship… which then leads to a better environment for employees and a welcoming atmosphere for customers.
Let’s look at situation #3.
You need extra cash to help your product line expand. However, you have an extra room that is designated for CO2 processing that you haven’t been using and is perfect to “rent out”.
Problem is… you can’t actually rent it out per state rules. Instead, you decide to sell equity in your company in exchange for use of the space.
Sounds like a win-win.
You pick up some extra legitimate cash and use a room that has been sitting empty and piling up boxes instead of products.
Now you need to get a contract in place, and no one wants to spend the time on it. Maybe someone eventually comes through with a draft unit purchase agreement and you figure it’s good enough.
Except, for whatever reason the new “partners” couldn’t talk to each other long enough to figure out the truly important things… and never hired an attorney or legal representation to get the job done.
There isn’t a logical reason why this deal doesn’t work. But there is always an excuse and one side blaming the other for the deal failing. Why? Lack of trust and the ability to logically work through the discussion and decisions that need to be made.
Communication is the how you build trust.
For a deal to be successful, you need to be able to work through all the “what ifs” and do that before you draft the “final” contract and any money exchanges hands.
The “what ifs” are endless. What happens if the company falls out of compliance and gets a violation from one of the employees? What happens if the company becomes hugely successful and the original partner wants out? What happens if the location all of a sudden is not compliant and the other guy needs to relocate? What happens if you need more money again for the next phase of expansion? What happens to the tax liability of the company when the “small” processor who came in all of a sudden is bringing in the majority of the sales? What happens if one of now partners dies or can no longer operate their side of the business? Who is responsible for what? Who reports to whom? The list never ends.
How does this scenario end?
In a very ugly lawsuit that usually involves a lot of people and a whole lot of money and time.
Look, communication is key to building trust. If you can’t manage to have a discussion with your “partner” up front about the different scenarios when you are still in the “honey moon” stage of this deal… how in the world you think you will be able to have a rational discussion when things aren’t perfect anymore?
Nothing in the cannabusiness world is simple, easy, or fast. If you are in the biz, then you know that. If you are trying to get in, then you should understand that.
Do yourself a favor, and if you can’t save yourself from you… then hire someone who can.
When you need a reference to a true cannabis professional, or when you need a team who understands how Washington works, we can help with that. Sometimes all it takes is talking to keep yourself moving forward. We’re pretty good and making the hard stuff less intimidating.
Give us a call at (206) 466-4020 or firstname.lastname@example.org.